Borrowers struggle to make mortgage payments
Figures to be published on Tuesday by Fitch Ratings point to a weakening home loan market nationally, with one in 400 borrowers falling more than 30 days behind on their repayments in the six months to March.
Although repaying a variable loan became cheaper over the period, Fitch said the national share of mortgages that had become "delinquent" rose from 1.2 per cent to 1.45 per cent. The five-year average is 1.53 per cent.
"The Reserve Bank of Australia's decision to reduce the cash rate did not have a positive impact on mortgage performance in the six months to end-March 2013, in contrast to the six months to end-September 2012," Fitch said.
The figures are seen as a potential forward indicator of lending losses for banks, which have so far avoided any fallout from rising unemployment.
The Fairfield-Liverpool area of Sydney had the highest share of borrowers who were more than 30 days behind on their mortgage, while the worst-performing Victorian region was Hume City.
The data contrasts with a rise in house prices in almost all capital cities over the past financial year.
Capital city home values were up 3.8 per cent in the 2012-13 financial year, compared with a 3.6 per cent fall in value in the previous financial year, according to the RP Data-Rismark Home Value Index.
House prices rose in each capital city, except Hobart, over the past 12 months, where prices fell by 1.8 per cent.
Darwin posted the strongest gains, with prices up 6.1 per cent, followed by Perth, where home prices grew by 6 per cent. Sydney was third with a rise of 5.6 per cent.
The national trend showed that lower mortgage rates were starting to have a positive effect on the housing market, RP Data research director Tim Lawless said.
"If confidence levels remain high and labour markets continue to show a low rate of unemployment then we would expect that home values will continue to trend higher, albeit at a relatively measured pace," Mr Lawless said.
Sydney's most expensive suburbs have had price rises of 4.8 per cent over the past six months, compared with a 3.2 per cent rise for the most affordable segment of the market in that city.
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A growing number of borrowers are struggling to keep up with mortgage repayments despite deep cuts in interest rates. Fitch Ratings reports a weakening home loan market, with the national share of mortgages classed as delinquent rising in the six months to end‑March 2013.
Fitch found that one in 400 borrowers fell more than 30 days behind on repayments in the six months to March. The national delinquency rate rose from 1.2% to 1.45% over that period (the five‑year average is 1.53%).
Sydney’s south‑west is suffering most from mortgage stress. The Fairfield‑Liverpool area had the highest share of borrowers more than 30 days behind, and Hume City was the worst‑performing Victorian region.
According to Fitch Ratings, the RBA’s decision to reduce the cash rate did not have a positive impact on mortgage performance in the six months to end‑March 2013, which contrasts with the improvement seen in the six months to end‑September 2012.
The reported increase in delinquencies is seen as a potential forward indicator of lending losses for banks. So far banks have largely avoided fallout from rising unemployment, but worsening mortgage performance could increase risk down the track.
House prices rose in almost all capital cities in the 2012–13 financial year: capital city home values were up 3.8% overall after a 3.6% fall the previous year. Despite rising delinquencies, RP Data‑Rismark finds home values increased in most capitals—Darwin (+6.1%), Perth (+6%), Sydney (+5.6%)—with Hobart the only capital to fall (‑1.8%).
RP Data research director Tim Lawless says lower mortgage rates can help the housing market, but sustained growth depends on confidence levels remaining high and labour markets continuing to show a low rate of unemployment.
In Sydney, the most expensive suburbs recorded price rises of 4.8% over the past six months, while the most affordable segment of the market rose by 3.2% over the same period.
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